The trading session on the 6th of September-24 was nothing short of alarming and was able to send a wave of chill across the minds and hearts of all market participants. The BSE Sensex plummeted by 900 points, the NSE Nifty 50 dropped by 1.2% & Banking Index Banknifty dropped by 1.75%. The Advance-Decline ratio for Nifty50 was 7 to 43.
The major reason attributed to such a fall from analysts is weaker Jobs Data from the US fuelling concerns regarding an economic slowdown. Dr Vijayakumar – Head Investment Strategist at Geojit Financial Services noted, “There is a consensus that the Fed will cut rates in the September meeting. However, the extent of the cut will be determined by the jobs data. If the August numbers are lower than market expectations and unemployment rises the Fed might as well cut rates by 50 bp and the markets might not perceive this positively”. Domestic concern over high valuations following a continuous rally is also stimulating investors to book some profits.
The State Bank of India(SBI) led the losing pack among the banks. The stock fell more than 3%. Goldman Sachs has revised its recommendation for the stocks as “Sell”. Adani Ports, NTPC and ITC fell 2% each. Reliance Industries fell more than 1.9% to a level of 2929. The impact was felt across sectors. Nifty PSU Bank and Oil & Gas fell by 2% while Auto, Media and Metal dropped by more than 1%. Small-cap and mid-cap also dropped 0.9% and 1.3% respectively.
Nifty 50 closed above its support of 24800. This is the crucial Fibonacci retracement level of 38.2%. Further declines up 24600 and 24000 are possible if the index breaks the crucial support of 24800.